The battle to secure the intellectual property assets of Gloucester Engineering Co.'s bankrupt Austrian film equipment unit may not yet be quite over.
Swiss Winding Invention, which had previously offered 530,000 euros ($674,000) for the business assets of Gloucester Engineering Europe, said it is prepared to double that figure and hopes to block court approval of the settlement proposal put forward by the Austrian firm's U.S. parent.
Swiss Winding Invention Chairman Carlos Martinez, who founded the high-performance film-winding machinery manufacturer Wintech Winding Technology in the 1990s, said Sept. 7 that he had raised his bid for the business assets to 1 million euros ($1.27 million), and that he was working with a Gloucester Engineering Europe creditor to file an appeal against the settlement proposal before the Sept. 14 deadline.
We will be entering an appeal, Martinez said in a recent interview. I personally believe that we have been abused over several months. We had a signed contract [with the bankruptcy trustee] and thought we had bought the company.
Gloucester Engineering Co. Chairman John Sharood declined to outline the company's likely response prior to an appeal being lodged and the settlement proposal being rejected.
However, he made it very clear that the company would not give up on its claim to the intellectual property.
We will resist any attempt by Swiss Winding Invention to illegally get hold of Gloucester Engineering U.S. intellectual property, he said.
One of the key factors in the creditors' acceptance of the settlement proposal was that it avoided potential legal argument over ownership of Gloucester Engineering Europe's intellectual property and customer lists its major assets.
While Rapperswill, Switzerland-based Swiss Winding's earlier offer presented a higher return to creditors 530,000 euros against Gloucester Engineering Co's 360,000 euros ($457,800) the trustee could not release the funds until any legal challenge had been resolved.
Raoul Wagner, the Austrian bankruptcy trustee handling Gloucester Engineering Europe, said a raised offer on the part of Swiss Winding would be more attractive to creditors, but they would still have to weigh in on some money now vs. the possibility of more money later.
Swiss Winding Invention may put more birds in the bush, which makes it more interesting for the creditors. But Gloucester Engineering Co. has put a bird in the hand, he said.
Wagner described Gloucester Engineering Co.'s claims to ownership of all Gloucester Engineering Europe intellectual property as not convincing and said the company had not put evidence forward over the months since the bankruptcy to support its claim. But he said it is not possible to move forward with a sale if a potential legal claim is outstanding.
Swiss Winding Invention has already taken on five former Gloucester Engineering Europe staff. Martinez said the offer of 1 million euros for the company's intellectual property may seem high, but he sees sound commercial value in the assets.
We invested first of all in the human capital and we have five people working on service now. But when you are working in after-sales service, you need the parts lists and the drawings. We want to service the market with spare parts, he said.
Subsidiary Swiss Winding Performance is already active in manufacturing high-end film-winding systems and generates sales of around 6.5 million euros ($8.3 million) a year. Martinez estimates the Gloucester Engineering Europe spares and service business could add a further 2.5 million ($3.2 million) in sales.
Gloucester Engineering filed for Chapter 11 protection from creditors in U.S. Bankruptcy Court in Boston in June. Sharood said the Gloucester, Mass.-based company is currently working with its key financial backer, Blue Wolf Capital Management, on a financial reorganization package that will be submitted to the court in the near future.